YouTube could compete with Apple and Amazon by offering third-party video subscription services
YouTube is reportedly mulling over offering third-party subscriptions to users that will take attention away from Amazon and Apple — and keep people in Google’s ecosystem.
The company is considering giving customers the ability to sign up for a “wide range of subscription-streaming services run by entertainment companies,” according to a new report from The Information. Essentially, YouTube could allow people to purchase subscriptions to services from networks like Showtime, HBO, Netflix, CBS All Access, and others if it goes forward. YouTube declined to comment on the report when asked by The Verge.
There are a number of companies that already do this, but Amazon and Apple are two of the biggest collectors of services and giving them to customers already using their products. Amazon Prime Video subscribers (the company currently has 150 million Prime members who all get Amazon Prime Video as part of their membership) and Apple hardware users can purchase subscriptions through their respective Amazon’s Channels program or TV portals.
Amazon and Apple then take a portion of revenue from every sign-up the various services receive. BMO Capital Markets projected that Amazon “would make $2.6 billion from its channels product in 2019, growing to $3.6 billion in 2020,” according to The Information. By offering a la carte versions of the traditional television bundle that more people are trying to escape and giving customers a way to pay for the subscriptions they want without having to deal with pesky cable contracts and cancelation fees, Amazon and Apple can control a growing portion of a growing customer base.
It’s a good business that Google is becoming more interested in as its subscription service on the YouTube side grows in general. Google CEO Sundar Pichai told investors that YouTube has 20 million paid premium subscribers (a combination of YouTube Premium and YouTube Music), and 2 million subscribers on its internet TV service, YouTube TV. That’s a growth of more than 1 million subscribers on YouTube TV in less than a year, according to reports. YouTube’s various subscription services are a growing business, one that Pichai specifically noted Google is interested in growing.
Just a quick glance at the numbers confirm that it’s a sector a company like Google should be interested in exploring. Ratings tracking firm Nielsen’s new overall audience report confirms that nearly 20 percent of all TV watching in homes across the United States is being consumed via streaming services, both paid and ad-supported. And 93 percent of people are willing to increase the number of services they pay for (and they’re looking to do that in a way that’s convenient and easy).
It’s what makes being a host to a number of these services important to companies like Amazon, Apple, and Roku. Add to this that YouTube has 2 billion monthly users spending millions of hours watching content — 500 hours of video are uploaded every minute — and there’s a case that Google can make, suggesting they’re in a good spot to take on competitors.
The big issue is there’s no minimum guarantee this will take off. Consumers already have easy access to Amazon Channels and are already using Apple products. Plus, high programming fees make the minimum guarantee harder to hit. YouTube has the advantage of being able to lean on its advertising revenue ($15 billion in 2019) and Google’s larger revenue to offset costs and possible losses.
But the goal is to eventually turn a profit, and that comes down to what services YouTube creates partnerships with. A big reason that Facebook’s subscription video offerings didn’t take off, and has now reportedly shut down, is in part because the biggest services it used were niche apps like CollegeHumor, not major drivers like HBO. Not to mention people who want HBO can easily get it through the network itself (HBO Now), easily through the App Store, or as an add-on through their Amazon Prime Video membership. Customers who subscribe to services like Hulu Live can also pick up subscriptions to other services via add-on options; there’s no end to how people can sign up for something.
That’s where efficiency and simplicity come into play: Amazon and Apple are already hubs for people’s day-to-day content. Amazon Prime Video and Channels work in large part because people are using Amazon to shop and are already paying for an ecosystem. Apple has hardware that people carry in their pockets; having everything channeled through the main retail hub that powers content on phones makes sense. Whether Google’s YouTube can become a home for all TV viewing, like the way Apple and Amazon do, is yet to be seen. But Google isn’t one to shy away from trying.
YouTube is reportedly mulling over offering third-party subscriptions to users that will take attention away from Amazon and Apple — and keep people in Google’s ecosystem. The company is considering giving customers the ability to sign up for a “wide range of subscription-streaming services run by entertainment companies,” according to…
